Certification for Major Illicit Drug Producing and Drug Transit Countries

[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]

[Presidential Documents]

[Pages 11319-11343]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 99-5668]

[[Page 11317]]

_______________________________________________________________________

Part XIII

The President

_______________________________________________________________________

Presidential Determination No. 99-15 of February 26, 1999--

Certification for Major Illicit Drug Producing and Drug Transit

Countries

Presidential Documents

Federal Register / Vol. 64, No. 44 / Monday, March 8, 1999 /

Presidential Documents

___________________________________________________________________

Title 3--

The President

[[Page 11319]]

Presidential Determination No. 99-15 of February 26,

1999

Certification for Major Illicit Drug Producing

and

Drug Transit Countries

Memorandum for the Secretary of State

By virtue of the authority vested in me by section

490(b)(1)(A) of the Foreign Assistance Act of 1961, as

amended (``the Act''), I hereby determine and certify

that the following major illicit drug producing and/or

major illicit drug transit countries/dependent

territories have cooperated fully with the United

States, or have taken adequate steps on their own, to

achieve full compliance with the goals and objectives

of the 1988 United Nations Convention Against Illicit

Traffic in Narcotic Drugs and Psychotropic Substances:

LAruba, The Bahamas, Belize, Bolivia, Brazil,

China, Colombia, Dominican Republic, Ecuador,

Guatemala, Hong Kong, India, Jamaica, Laos, Mexico,

Pakistan, Panama, Peru, Taiwan, Thailand, Venezuela,

and Vietnam.

By virtue of the authority vested in me by section

490(b)(1)(B) of the Act, I hereby determine that it is

in the vital national interests of the United States to

certify the following major illicit drug producing and/

or major illicit drug transit countries:

LCambodia, Haiti, Nigeria, and Paraguay.

Analysis of the relevant U.S. vital national interests,

as required under section 490(b)(3) of the Act, is

attached.

I have determined that the following major illicit drug

producing and/or major illicit drug transit countries

do not meet the standards set forth in section 490(b)

for certification:

LAfghanistan, Burma.

In making these determinations, I have considered the

factors set forth in section 490 of the Act. Given that

the performance of each of these countries/dependent

territories has differed, I have attached an

explanatory statement for each of the countries/

dependent territories subject to this determination.

You are hereby authorized and directed to report this

determination to the Congress immediately and to

publish it in the Federal Register.

(Presidential Sig.)

THE WHITE HOUSE,

Washington, February 26, 1999.

[[Page 11320]]

STATEMENTS OF EXPLANATION

Afghanistan

According to U.S. Government (USG) estimates,

Afghanistan continued to be the world's second largest

producer of opium poppy in 1998. Poppy cultivation and

opium gum production increased by seven percent in

1998, despite poor weather, resulting in an estimated

1,350 metric tons (mts) of opium gum production.

Afghanistan is a party to the 1988 UN Drug Convention,

but neither of the warring political factions (Taliban

nor Northern Alliance) took steps to demonstrate that

they take Afghanistan's obligations under the

Convention seriously. Aside from Taliban authorities

burning a reported one ton of opiates in Jalalabad in

June, there is no evidence to indicate that any action

was taken by any faction to discourage poppy

cultivation, destroy morphine or heroin laboratories,

or arrest and prosecute narcotics traffickers. Numerous

reports indicated that members of all factions at all

levels continued to profit from the drug trade. UN Drug

Control Program (UNDCP) initiatives made very slow

progress, while a USG-funded non-governmental

organization (NGO) program achieved many of its

alternative development goals.

By the end of the year, the Taliban faction

controlled over 80 percent of Afghan territory and 96

percent of Afghanistan's opium-growing areas. The

Taliban's inaction and lack of political will, as well

as substantial drug trade involvement on the part of

some local Taliban authorities, also impede meaningful

counter-narcotics progress.

The Taliban condemned illicit drug cultivation,

production, trafficking and use in 1997. However, there

is no evidence that Taliban authorities took action in

1998 to decrease poppy cultivation, to arrest and

prosecute major narcotics traffickers, to interdict

large shipments of illicit drugs or precursor

chemicals, or to eliminate opiate processing

laboratories anywhere in Afghanistan. Opium is

Afghanistan's largest cash crop and, by many estimates,

narcotics remain a significant and perhaps the largest

source of income. Some Taliban authorities reportedly

benefit financially from the trade and provide

protection to heroin laboratories. There are numerous

reports of drug traffickers operating in Taliban

territory with the consent or involvement of some

Taliban officials.

In 1998, poppy cultivation increased and spread to

new areas. In an unverified policy statement published

by the Taliban's High Commission for Drug Control on

September 10, 1998, which appears to contradict the

Taliban's November 1997 commitment to UNDCP, the

Taliban indicated that they would not support a

strategy of forced eradication if farmers who

benefitted from alternative development failed to

comply with the requirement to abandon poppy

cultivation.

A USG-sponsored poppy eradication/alternative

development program in Helmand Province through Mercy

Corps International (MCI), an American NGO, continued

this year. It was originally funded in 1997 for

$772,000 and expanded in FY 99 to $1.04 million. It is

the only poppy reduction project being implemented by

an NGO in Afghanistan. MCI accomplished all but one of

its objectives during the year. The one objective not

accomplished--delivery of fruit trees to farmers--was

not met due to rainy weather. The trees were held for

the next planting season.

The USG strongly supports the UN Special Mission to

Afghanistan and its efforts to achieve peace and

facilitate the development of a broad-based government

that respects international norms of behavior on

narcotics, terrorism and human rights. The Afghan

Support Group (ASG) of major donors to Afghanistan met

twice during the year. At the meeting in Tokyo in

December, the ASG endorsed the principle that counter-

narcotics is a cross-cutting issue and should be

integrated wherever possible with other programs in

Afghanistan. UNDCP agreed to include gender and human

rights components in its counter-narcotics programs

wherever appropriate.

[[Page 11321]]

Denial of certification does not cut off USG

counter-narcotics assistance and would thus have

minimal effect in terms of implementation of this

policy. Continuation of large-scale opium cultivation

and trafficking in Afghanistan, plus the failure of the

authorities to initiate law enforcement actions,

preclude a determination that Afghanistan has taken

adequate steps on its own or that it has sufficiently

cooperated with USG counter-narcotics efforts to meet

the goals and objectives of the 1988 UN Drug

Convention, to which Afghanistan is a party.

Aruba

Aruba is a staging area for international narcotics

trafficking organizations, which transship cocaine from

Colombia, Venezuela, and Suriname to Europe and the

United States. Drug traffickers are attracted to Aruba

by its key position near the Venezuelan and Colombian

coasts, its efficient infrastructure, its excellent air

and sea links to South America, Europe, Puerto Rico,

and other Caribbean locations, and its reputation for

relatively light prison sentences and good prison

conditions.

Aruba, the nearby Netherlands Antilles, and the

Netherlands comprise the three parts of the Kingdom of

the Netherlands. Since 1986, Aruba has had autonomy

over its internal affairs and independent decision-

making ability in a number of counter-narcotics areas.

The Government of the Netherlands (GON) is responsible

for the defense and foreign affairs of Aruba, and

assists the Government of Aruba (GOA) in its efforts to

combat narcotics trafficking. Aruba is a participant in

a joint Netherlands-Netherlands Antilles-Aruba Coast

Guard, which has anti-drug responsibilities. Although

the Netherlands is a party to the 1988 UN Drug

Convention, the other two parts of the Kingdom are not

covered by the Convention.

In late 1998, Aruba passed an international asset

seizure law, the final legislative prerequisite to

requesting that the Kingdom of the Netherlands extend

the 1988 UN Drug Convention to Aruba. In December,

Aruba formally requested that extension, which is

expected during 1999.

During 1998, the GOA continued to cooperate fully

with the USG on counter-narcotics goals and objectives.

Three Aruba nationals believed to be major drug

traffickers and money launderers were extradited to the

United States and are now awaiting trial. They include

two members of the Mansur family, one of the richest

and most powerful in Aruba, who are accused of

belonging to a large network that laundered some $40

million for Colombian drug traffickers operating in the

United States. These extraditions were the first under

a 1997 law permitting the extradition of Aruba

nationals.

Aruba law enforcement agencies, including the Aruba

Police and Customs, have a good working relationship

with USG law enforcement agencies. They cooperate with

the DEA on joint investigations and with the U.S. Coast

Guard on maritime law enforcement searches and

interdictions. Joint USG-GOA efforts contributed to an

increase in the number of arrests in 1998 of drug

couriers transiting Aruba. A proposed U.S.-Kingdom of

the Netherlands maritime drug enforcement agreement,

pertaining to the Caribbean, is currently under

negotiation.

The Bahamas

The Bahamas is a major transit point for South

American cocaine and Jamaican marijuana en route to the

United States. Very small amounts of cannabis are grown

on the islands for domestic consumption. The USG and

the Government of the Commonwealth of The Bahamas

(GCOB) continue to enjoy a productive and positive

counter-drug working relationship. The GCOB places a

high priority on combating drug transshipments through

its archipelago, and is moving decisively to combat

money laundering and other drug-related crimes. The

GCOB cooperates very closely with the USG on our

combined law enforcement effort, Operation Bahamas and

Turks

[[Page 11322]]

and Caicos (OPBAT). The Bahamas was the first country

to ratify the 1988 UN Drug Convention, and the GCOB

continues to take steps to implement its provisions.

Following passage of strong anti-money laundering

legislation in 1996, Bahamian authorities are closely

monitoring bank compliance and investigating suspicious

financial transactions.

U.S. and Bahamian law enforcement officials worked

very closely throughout the year to respond to notable

increases in air and maritime transshipment incidents.

The GCOB is strongly emphasizing money laundering and

asset forfeiture investigations and prosecutions. The

GCOB also continued in 1998 to strengthen its judicial

system, with assistance from the USG. However,

unreliable jury pools and weaknesses in the drug laws

resulted in several major Bahamian drug dealers

avoiding conviction in 1998. Despite committed and

talented judicial leadership, The Bahamas needs to

improve the effectiveness of its court system in

securing convictions against major dealers and

organizations by strengthening its drug trafficking

laws and improving the prosecutorial capabilities of

the police prosecutors. The USG will continue to work

with the GCOB in this area, both bilaterally and

through regional training and assistance projects.

In December 1998, the Royal Bahamas Police Force

(RBPF) Drug Enforcement Unit arrested two police

officers from the RBPF Drug Canine Unit at Nassau

International Airport for allegedly working with a

cocaine trafficking ring. The GCOB needs to continue to

move decisively against corruption at Bahamian ports of

entry.

Belize

Belize remains a significant narcotics transit

country. After taking office in August of 1998, the new

Government of Belize (GOB) made it clear it takes

seriously the problem of drug transit through its

territory, including the impact the trafficking

activity has on domestic crime. The new government has

created a national drug abuse council, which is in the

process of creating a comprehensive drug control

strategy. The Belize Police Force, the Belize Defense

Force and the rapid response force ``Dragon Unit'' will

remain important parts of the national drug control

strategy. Belize is party to the 1988 UN Drug

Convention and the GOB works closely with the USG in

the fight against narcotics trafficking and

transnational crime.

Upgrading training, professionalism and equipment

in the Belize Defense Force continues as the focus of

the USG/GOB counter-narcotics program to combat violent

crime and drug trafficking. With the completion of

training of the money-laundering unit staff, the USG/

GOB effort is now focused on building and equipping a

Financial Investigations Unit to enforce money-

laundering regulations. The GOB is energetic in its

unilateral efforts to reduce drug trafficking through

its borders and to combat associated crime. It is a

strong supporter of regional and cooperative counter-

narcotics efforts.

Concern over corruption remains. The dismissals of

suspected corrupt police officials in 1998 and the new

government's efforts to rid itself of institutional

corruption appear to demonstrate the GOB's commitment.

Concerns were raised, however, by the government's

recent attempt to dismiss the Supreme Court's chief

justice over a case with political overtones.

Counter-narcotics efforts in Belize are hampered by

lack of manpower, training and equipment. The

relatively large expanse of uninhabited territory and

the thousands of coastal cays and inland waterways that

are used by traffickers as drop-off sites for drugs

contribute to the problem. Seizures in 1998 of just

under one metric ton of cocaine were significantly

lower than in 1997. Slightly more than 200,000

marijuana plants were eradicated.

Boliva

Boliva retains is position as the world's second

largest producer of cocaine even though it has less

coca under cultivation than either Peru or Colombia.

[[Page 11323]]

The cocaine industry in Bolivia is fragmented and

dominated by small to mid-level trafficking

organizations which manufacture, transport and

distribute cocaine base in hundred to multi-hundred

kilogram quantities per month. Successful law

enforcement efforts to prevent significant quantities

of chemicals utilized in processing coca leaf into

cocaine base and cocaine hydrochloride (HCL) from being

smuggled in from neighboring countries have negatively

impacted the quality of cocaine produced, with a

resulting decrease in marketability.

In an impressive show of resolve and political

will, the Government of Bolivia (GOB) achieved an

unprecedented level of coca eradication--a net

reduction of 17 percent, and a gross eradication level

of 11,621 hectares. Significant successes in increased

arrests of narcotics traffickers, as well as seizures

of cocaine, cocaine products and precursor chemicals,

were also realized.

The Banzer administration is the first to devise

and set forth a credible, formal strategy to eliminate

coca cultivation in Bolivia. Despite a shaky start last

spring and continuing violence against eradication and

counter-narcotics forces, the GOB showed its

determination to persevere with its five-year plan. USG

experts also credit 1998's success to the GOB's

abolition of direct compensation to coca growers, and

to devoting enough human resources to the eradication

and security effort. The Banzer administration's

embrace of alternative development has not only

provided farmers with licit, profitable alternatives to

growing coca, but has changed public opinion against

coca growing and cocaine production activities.

Three-fourths of Bolivia's judicial reform package

has been enacted, which should make the criminal

justice system faster, more transparent and accessible,

less politicized, and less corrupt. Currently being

debated in the legislature is the Code of Criminal

Procedure, the final part of the reform package. It

should include language that permits police to use

informants, controlled deliveries, undercover

operations, and other modern law enforcement tools.

Action on money laundering crime has been lacking,

although the GOB named a Director of the Financial

Investigations Unit of the Superintendency of Banks,

which is charged with enforcing the anti-money

laundering law.

If Bolivia is to realize its five-year goals, in

1999 the GOB should act to prevent new coca plantings

and continue eradication efforts in a sustained manner.

Other important objectives include initiation of

eradication operations, alternative development in the

Yungas, and prosecutions of those who plant new illicit

coca fields there and in the Chapare. The GOB should

also move forward to implement vigorously the law

criminalizing money laundering, and actively seek out,

investigate and prosecute public officials engaged in

corruption. Finally, if its efforts are to be fully

successful, the GOB should ensure that the new Code of

Criminal Procedures provides law enforcement

authorities with the tools they need to investigate and

prosecute narcotics offenders.

Brazil

Brazil is a major transit country for cocaine

shipped by air, river, and maritime routes from

Bolivia, Peru, and Colombia to the United States and

Europe. Because of increased interdiction of trafficker

aircraft in Peru (along the Peru/Colombia air

corridor), traffickers have shifted illicit narcotics

flights into Brazilian air space. Brazil's vast and

sparsely populated Amazon region provides ample

opportunity for traffickers to transship drugs and

chemicals by air and riverine routes. A southern ``drug

route'' also exists along Brazil's borders with

Paraguay and Bolivia. While not a major drug

cultivation country, Brazil is a major producer of

precursor chemicals and synthetic drugs.

Several key legislative initiatives, including an

anti-money laundering law and legislation permitting

the military to interdict unauthorized civilian

aircraft (including those suspected of smuggling

narcotics), were passed

[[Page 11324]]

by the Congress in 1998. A two-year-old omnibus

counter-narcotics bill remained pending in the Congress

at year's end. Brazil's major counter-narcotics policy

initiative was formation of the National Anti-Drug

Secretariat (SENAD) which will coordinate counter-

narcotics efforts and activities nationwide.

Federal police continued their heightened

surveillance of the Amazon region, which resulted in

seizures of drugs, aircraft, boats and an assortment of

weapons. While seizures of cocaine in 1998 were about

the same as in 1997, and marijuana seizures were

slightly lower than in 1997, seizures in psychotropic

drugs increased tenfold over 1997 levels. Inadequate

staffing and resources continue to hamper activities of

the counter-narcotics unit of the Federal police.

Although Brazil does not extradite its own

citizens, the Government continues to cooperate with

the United States and other countries in the

extradition of individuals accused of narcotics-related

crimes.

Most of Brazil's demand reduction efforts are aimed

primarily at young people, who constitute the largest

group of drug users in the country. With the creation

of SENAD, the GOB will focus even more attention on

drug demand reduction, education, and treatment

programs. Over half of Brazil's 26 states conduct some

type of drug awareness program.

Top Brazilian counter-narcotics officials in SENAD

have expressed a strong interest in more active

cooperation and greater coordination with the United

States in narcotics law enforcement, including

interdiction activities.

Burma

Burma continues to be the world's largest source of

illicit opium and heroin. There was, however, a

significant decline in production and cultivation from

1997 levels. The 1998 crop estimates indicate there

were 130,300 hectares of opium poppy cultivation, down

16 percent from 1997. The potential yield from this

crop is up to 1,750 metric tons of opium gum. This is

the lowest potential production figure in ten years and

a drop of 26 percent from 1997 figures. Most of this

crop decrease was due to weather; however, the

Government of Burma (GOB) did engage in opium crop

eradication efforts.

During 1998, seizures of methamphetamine tripled,

although opium and heroin seizures were below last

year's record levels. While there were cases of

interdiction and arrests for narcotics trafficking of

members of some tribal groups located outside the

protected tribal areas, the GOB has been unwilling or

unable to take on the most powerful groups directly.

Cease-fire agreements with insurgent tribal groups

dependent on the narcotics trade involve an implicit

tolerance of continued involvement in illicit narcotics

for varying periods of time. Given the scale of the

problem in Burma, and what would be necessary to bring

about lasting improvement, the GOB's efforts remain

inadequate.

There is reason to believe that money laundering in

Burma and the return of narcotics profits laundered

elsewhere are significant factors in the overall

Burmese economy, though the extent is impossible to

measure accurately. Political and economic constraints

on legal capital inflows magnify the importance of

narcotics-derived funds in the economy. An

underdeveloped banking system and lack of enforcement

against money laundering have created a business and

investment environment conducive to the use of drug-

related proceeds in legitimate commerce. The GOB made

little if any effort against money laundering during

1998.

Despite some progress over the past year, the USG

remains concerned that Burma's counter-narcotics

efforts are in no way proportional to the extent of

narcotics cultivation and trafficking. Effective

toleration of money laundering by the GOB, failure to

turn over notorious traffickers under indictment in the

United States, and general lack of respect for the rule

[[Page 11325]]

of law are also concerns. The United States remains

prepared to cooperate with Burma in international

efforts against narcotics, when the Burmese regime

presents a consistent pattern of cooperation in all

aspects of that effort.

Cambodia

Throughout 1998, Cambodia was embroiled in internal

political strife and proactive counter-narcotics

efforts suffered. This failure is reflected in a

serious drop in the statistics for seizures and

narcotics arrests. Reports indicate that narcotics

traffickers, alien smugglers, and other criminals have

found refuge in Cambodia. Corruption and factionalism

among Cambodia's police are also a continuing problem--

one police unit attacked another earlier this year in

an effort to intimidate the unit attacked. Cambodia is

not a major producer of narcotics or a center for

narcotics-derived money laundering, although reports

that narcotics proceeds are in fact laundered there

persist. The country's principal involvement in the

international narcotics trade is as a transit route for

Southeast Asian heroin intended for overseas markets,

including the United States. Marijuana is cultivated

for export and the authorities have had only marginal

success at stemming this flow, though Cambodian

marijuana is not thought to have a major effect on the

United States. Reports persist about the involvement by

some elements of the Royal Cambodian Armed Forces and

the national police in narcotics trafficking.

Outward cooperation by Cambodian police officials

with the DEA on specific requests is excellent. Senior

government officials consistently responded to requests

to make available persons wanted on U.S. arrest

warrants, including in narcotics cases. The Royal

Government of Cambodia (RGC) has established a National

Authority for Combating Drugs and a special drug

enforcement unit in the Ministry of Interior; however,

the effectiveness of these bodies has been limited by a

lack of resources and training, corruption at various

levels of the RGC, and the country's geographical

location adjacent to major narcotics producing areas.

In the latter part of 1998, competing factions in

Cambodia finally formed a coalition government,

resulting from elections. We believe that at this

crucial time, imposition of counter-narcotics sanctions

would undermine U.S. interests in democracy and

regional stability as well as limit anti-narcotics

efforts. The ability to provide strategically placed

U.S. aid at the appropriate time can help strengthen

Cambodian institutions, with the objective of promoting

greater official accountability and adherence to the

rule of law. Furthermore, it is in the U.S. interest

for Cambodia to contribute to the political and

economic stability of the region, which should be

furthered by Cambodia's anticipated accession to ASEAN

membership in 1999. Thus, on balance, the consequence

for the United States related to the counter-narcotics

setbacks are far outweighed by the risks of being

unable to support the new coalition government now in

place at this critical juncture.

China

China continued to take strong and effective

measures to combat the use and trafficking of narcotic

drugs in 1998. China is a party to the 1988 UN Drug

Convention, as well as to the 1961 UN Single Convention

and its protocols, and the 1971 UN Convention on

Psychotropic Substances. The Chinese government is

committed to achieving the goals of the 1988

Convention, implementing several new initiatives to

strengthen its counter-narcotics efforts at all levels,

from apprehending and prosecuting traffickers to

counteracting drug addition and abuse.

Preliminary figures indicate that during 1998

Chinese police seized record amounts of heroin, other

illicit drugs, and precursor chemicals. The Chinese

government sponsored a nationwide education campaign

aimed primarily

[[Page 11326]]

at reducing drug use by youth. Narcotics enforcement

cooperation between the United States and China

continued to expand in 1998, with increased levels of

training, professional exchanges, and tactical-level

enforcement cooperation. The United States and China

established a Joint Liaison Group on Law Enforcement

Cooperation, and are taking steps to further enhance

mutual legal assistance; in general, however, China's

response to U.S. requests could have been more

forthcoming. The DEA anticipates the assignment of

permanent staff for its new office in Beijing sometime

in 1999.

China is a major producer of precursor chemicals.

The ephedra plant, from which the precursor chemical

ephedrine is extracted, grows wild in northern China.

China produces and legally exports potassium

permanganate, which can be used in cocaine production.

The Chinese government vigilantly monitors precursor

chemical exports and has in place a system of pre-

export notification. Yunnan, the province most directly

affected by China's growing drug problem, goes further

than the 22 chemicals on the 1988 Convention Watch List

by monitoring exports of 28 chemicals. According to

press reports, in the first ten months of 1998, Yunnan

provincial law enforcement authorities seized more than

300 metric tons of precursor chemicals destined for

illegal use, more than the amount confiscated

nationwide in all of 1997. China supports a law

enforcement program to increase interdiction in Yunnan

Province under the auspices of the UNDCP and funded by

the USG.

Although Chinese law prohibits laundering the

proceeds from illegal narcotics trafficking, China's

legal system and banking regulations generally have not

kept pace with the country's rapid economic

internationalization. Consequently, China is vulnerable

to possible exploitation by drug traffickers,

particularly from Burma, seeking to launder money.

Colombia

Colombia developed a solid record of success in

meeting the 1998 certification criteria, with several

notable exceptions. A new counter-narcotics strategy,

developed by the incoming Pastrana administration

earlier in the year, establishes a solid platform to

frame efforts in the coming years. Such strategic

planning was almost totally lacking in Colombia before

then. The USG is working closely with the Government of

Colombia (GOC) to refine and improve that strategy.

Pastrana administration officials have been very

receptive to U.S. offers of advice and assistance, and

expressed a commitment in the Joint Alliance Against

Drugs, signed during President Pastrana's visit in

October 1998, to continue close cooperation as we

advance our joint counter-narcotics goals. This

willingness to cooperate closely is the greatest

difference between the current status of efforts in

Colombia and the checkered history of the last four

years. While political will is difficult to measure and

can only be tested by time, it appears that a corner

has been turned in Colombia that will allow for much

closer cooperation and greater results in the near

future.

The Colombian National Police (CNP), under the

leadership of General Rosso Jose Serrano, added to its

record of outstanding performance in counter-narcotics.

This year the CNP received more and better support from

the Colombian armed services, and joint operations in

southern Colombia began to show success. Such joint

operations will be an important factor in the future of

the program, given the increasing threat to counter-

narcotics operations from heavily armed traffickers and

the guerrillas and paramilitaries who are involved in

many aspects of narcotics trafficking. For the third

straight year, record levels of illicit crops were

eradicated, although this eradication did not offset

the continuing expansion of cultivation by the

traffickers as part of their effort to concentrate the

entire drug industry within Colombia. The CNP also had

a strong year in terms of seizures and arrests of

important traffickers.

[[Page 11327]]

Another key criterion was fully met when the GOC

set up a successful program to register and regulate

privately owned aircraft in Colombia, which has the

effect of discouraging their use in narcotics

trafficking. The GOC has also begun to take action on

prison reform, a long-standing problem.

The biggest disappointment of 1998 was the 5-4

decision of the Colombian Constitutional Court in

August to uphold the new Colombian extradition law as

passed by Congress. The court rejected the claim

advanced and supported by both the Samper and Pastrana

administrations that procedural irregularities in the

congressional votes resulted in the passage of a law

which does not apply retroactively. The lack of

retroactivity in the law severely limits its

effectiveness. As a result, the law places the

imprisoned Cali cartel kingpins beyond the reach of

U.S. justice, at least with regard to crimes committed

before passage of the extradition law in December 1997.

The judicial system continues to be the weakest

link in Colombia's counter-narcotics performance. 1998

saw little progress in resolving the endemic problems

in a system that is plagued by corruption, incompetence

and inefficiency. Asset forfeiture laws and money-

laundering laws are still not enforced to any

meaningful extent, and needed legislative reforms such

as stiffer prison sentences for narcotics trafficking

and establishment of legislation to deal with ongoing

criminal enterprises have not been advanced.

Overall, however, Colombian counter-narcotics

performance improved in 1998, and the arrival of the

new Pastrana administration gives grounds for optimism

about the future.

Dominican Republic

The Dominican Republic is a major transshipment

point for drugs destined for the United States and

Europe. Traffickers smuggle narcotics from Colombia,

Venezuela, and Panama into Dominican territory by air

and sea, and from Haiti by land routes. The drugs are

then moved onward by air and sea to Puerto Rico and the

United States.

The Government of the Dominican Republic (GODR)

demonstrated strong counter-narcotics law enforcement

and interdiction efforts in 1998. The GODR continued to

cooperate fully with the USG on counter-narcotics goals

and objectives, including expanded cooperation under

the 1997 bilateral maritime interdiction agreement.

Cocaine and heroin seizures increased dramatically in

1998. The GODR initiated a new border patrol unit to

control the flow of drugs into the Dominican Republic

from Haiti. For the first time ever, the Dominican

Republic and Haiti cooperated on an anti-drug smuggling

border operation. The GODR and the USG signed an

agreement to establish a canine drug detection program

at Dominican airports and seaports. Despite recent

improvements, however, a weak judicial system continues

to hamper law enforcement efforts.

In 1998, the GODR enacted legislation repealing a

prohibition on the extradition of Dominican nationals

and explicitly authorizing the extradition of

nationals. The Dominican Republic subsequently

extradited one of its nationals to the United States in

1998. We will continue to urge the GODR to act on a

number of other U.S. extradition requests and to adopt

a National Counter-Narcotics Master Plan.

Ecuador

Ecuador continues to be a major transit country for

the shipment of cocaine from Colombia to the United

States and Europe. Traffickers also use Ecuador for

money laundering of drug profits and to transit

precursor chemicals destined for Colombian drug labs.

Some poppy and coca fields have been found within

Ecuador, but there are no indications that significant

amounts of heroin or cocaine are produced.

[[Page 11328]]

Although lack of adequate governmental funding for

counter-narcotics programs and little interagency

coordination are weak points, the Government of Ecuador

(GOE) continued to demonstrate its cooperation and

willingness to work closely with the USG in countering

narcotics trafficking and transshipments, chemical

diversions, money laundering, and judicial corruption/

inefficiency. The GOE has also stated its willingness

to improve bilateral cooperation in maritime

interdiction.

The GOE has increased the effectiveness of its

anti-narcotics activities by randomly deploying mobile

road interdiction teams along Ecuadorian highways, a

tactic which accounted for 40 percent of the drugs

seized by the police. Successes for the national police

included seizures of 42 kilograms of heroin and the

seizure of 7.6 tons of cocaine from the Fishing Vessel

DON CELSO. The GOE also deployed drug detector dogs at

airports; inaugurated a Joint Information Coordination

Center (JICC) in the major port city of Guayaquil; and

passed legislation to combat corruption and

inefficiency in the Customs Service. The Superintendent

of Banks indicated strong interest in creating a joint

task force to expedite interagency coordination in

pursuing financial investigation regarding control of

money laundering.

To improve the professionalism and efficiency of

its enforcement efforts, the GOE has created a judicial

police unit to foster closer coordination with

prosecutors. The GOE also plans to create a separate

anti-narcotics police unit within the judicial police

system to allow greater concentration of efforts in

this field.

Guatemala

President Arzu has taken Guatemala well down the

road to reconciliation of its 36-year internal

struggle. His efforts are now focused on combating

violent crime, organized crime and other domestic

issues. He has fully cooperated with the United States

in combating counter-narcotics trafficking in Guatemala

and in the region.

Guatemala's location and scarce law enforcement

resources facilitate its continued use by traffickers

as a transshipment and storage point for cocaine

destined for the United States via Mexico. Along with

increased use of motor vehicle and container shipments,

there has been an increase in airdrops of illicit drugs

over Guatemalan territory for consolidation and

transshipment. With USG assistance, the Department of

Anti-Narcotics Police (DOAN) has stepped up training to

react to air shipments and efforts to develop air

interdiction capabilities. The expanding self-funded

port security program and the trained DOAN agents made

impressive seizures in the past year.

The consolidation of the National Civilian Police

(PNC) continues on track with full integration of the

DOAN. The USG-trained DOAN seized almost 10 metric tons

of cocaine in 1998. The drug prosecutor assistance

program maintained its 90 percent conviction rate, with

some traffickers receiving sentences of up to 20 years.

The new drug prosecutor's field office in

Quetzaltenango accounted for 110 successful

prosecutions in 1998.

Guatemala is a party to the 1988 UN Drug Convention

and most GOG law enforcement activities are fully

consistent with its goals and objectives. However, some

of the Convention's provisions have not been codified

into law and regulations, including provisions on

extradition and money laundering. President Arzu has

also been unsuccessful in gaining legislative support

for ratification of a full maritime counter-narcotics

agreement.

In 1998, the Government of Guatemala (GOG) began

implementation of its national drug policy, the anti-

drug master plan, and national strategy which

incorporates both demand and supply reduction

objectives to be accomplished by specified ministries.

The GOG provided additional funding to plan

implementers to attack the alarming increase in drug

abuse docu

[[Page 11329]]

mented last year. The GOG also took major steps in

implementing assets seizure and precursor chemicals

regulations.

Haiti

Haiti in 1998 made significant progress in a number

of areas of counter-narcotics performance and

cooperation, but a political impasse spanning the

entire year precluded passage by Parliament of key

antidrug laws and other important steps. Resource

constraints--Haiti is the hemisphere's poorest

country--and the lack of an effective judiciary also

reduced the effectiveness of Haitian counter-narcotics

efforts. As a result, Haiti fell short of agreed-upon

counter-drug goals and cannot be certified as having

fully cooperated with the United States or on its own

to meet the goals and objectives of the 1988 UN Drug

Convention, to which Haiti is a party. However, the

vital national interests of the United States require

that foreign assistance continue to be provided to

Haiti.

Haiti is a significant transshipment point for

drugs, primarily cocaine, moving through the Caribbean

from South America to the United States. The increased

flow through Haiti is directly related to the success

of interdiction operations in other parts of the region

and the perception that the Government of Haiti (GOH)

is ill-prepared to respond.

The certification goals set, in consultation with

GOH, for 1998 were: to present to Parliament for

passage a set of anti-drug trafficking laws, including

money laundering and asset forfeiture, which were

drafted in 1997; to begin implementing the ``National

Master Plan for Combating Drugs in Haiti'' drafted in

1997; and to target at least one major international

narcotics organization for significant enforcement

action.

Haiti did not meet two of these three goals,

principally because of the prolonged political impasse

between the executive and legislative branches, funding

shortfalls, and insufficiencies in institutional

structures. The political stalemate prevented the

parliamenary ratification of a Prime Minister with

executive authority throughout 1998. This meant that,

in accordance with the constitution, no new

legislation, including the anti-drug laws and the

National Master Plan, could be presented to the

Parliament for enactment. (Indeed, the Parliament

failed to act even on legislation clearing the way for

significant new international loans, in which all

Haitian parties presumably had an interest.)

Although there was some implementation of elements

of the Master Plan, GOH efforts to investigate, arrest,

prosecute, or convict members of international drug

trafficking organizations were lacking. This lack of

success, however, must be understood in the broader

context of Haiti's pervasive poverty, its dysfunctional

judicial system, the still limited capabilities of the

four-year-old Haitian National Police (HNP), and the

inexperience and inadequacy of the two-year-old police

anti-narcotics unit (BLTS).

Although most of the specific goals set during the

year were not achieved, Haiti's performance and

cooperation with the United States improved

significantly in a number of key areas. Haiti signed a

Joint Information Coordination Center (JICC) agreement

with the United States. The entire staffs of the JICC

and BLTS were polygraphed. Under a DEA-mentored task

force concept, the flow of cocaine from Panama through

Port-au-Prince airport has been reduced. Port-au-

Prince's seaport is now the target of periodic

inspections, including by U.S. Customs Service sniffer

dogs in November. The HNP has indicated it will

cooperate on the expulsion to the United States of

third country nationals who are the subjects of U.S.

indictments. The Haitian Coast Guard fully cooperated

with the USCG ``ship rider'' program, and is

increasingly demonstrating independent initiative at

sea. The HNP counter-narcotics unit increased the

quantity of drugs seized without direct USG assistance.

The GOH also initiated the first joint Haitian-

Dominican drug monitoring effort at the Malpasse-Jimani

border crossing.

[[Page 11330]]

A vital national interests certification is

appropriate and necessary. A cutoff of U.S. bilateral

assistance mandated by denial of certification would

adversely affect vital U.S. national interests in

Haiti, including ending the ongoing political crisis,

promoting economic stability and democracy, and

stemming the flow of illegal drugs and migrants to the

United States.

Denial of certification would terminate USG

programs that provide critical support for Haiti's

fragile economy. Without external assistance and the

police mentoring that accompanies it, economic

stability and growth would be jeopardized, with

consequent renewed pressure on illegal immigration to

the United States.

USG and other international programs that go beyond

counter-narcotics assistance also address underlying

problems in the Haitian law enforcement and judicial

systems, especially endemic corruption and the lack of

a strong professional tradition, that contribute to a

weak anti-drug performance. A cutoff of USG programs

and the votes against multilateral development bank

funding would undermine USG efforts and reduce the

incentive for Haitian counter-narcotics entities to

improve that performance.

The risks posed to all of these U.S. interests by a

cutoff of bilateral assistance outweigh the risks posed

by Haiti's failure to cooperate fully with the USG or

to take adequate steps on its own to combat illicit

narcotics. Haiti's inability to fulfill key counter-

narcotics commitments in 1998 precludes full

certification, but decertification would deny GOH many

of the desperately needed resources to make progress in

the counter-narcotics and other arenas.

Hong Kong

Hong Kong traffickers continue to control large

portions of Southeast Asian narcotics traffic,

arranging both the financing and shipping of narcotics

through Asian ports. In 1998, none of the heroin

seizures in Hong Kong appeared destined for the U.S.

market. No major heroin seizures in the United States

had clearly transited Hong Kong. However, historical

precedent, geographic location, transportation

infrastructure, and trade activity suggest that Hong

Kong remains an important factor in heroin supply to

the United States.

Hong Kong uses a multi-pronged strategy in

combating drug trafficking and abuse, incorporating

legislation and law enforcement, treatment and

rehabilitation, preventive education and public

awareness, and international cooperation. Money

laundering, which often stems from drug trade proceeds,

is a serious issue for the Hong Kong authorities. The

Financial Action Task Force reviewed Hong Kong's

financial system in April 1998. Hong Kong played an

active role in reducing illicit trafficking of

narcotics and precursor chemicals, another major

concern, through its participation in the UN Commission

on Narcotic Drugs as part of the People's Republic of

China delegation. During 1998, a new extradition treaty

between the United States and Hong Kong entered into

force. Hong Kong also signed mutual legal assistance

agreements with several countries and, in December

1998, the United States ratified a Mutual Legal

Assistance Agreement and a Prisoner Transfer Agreement

with Hong Kong. Both agreements await legislative

approval in Hong Kong.

While trafficking and money laundering remain

issues for Hong Kong, the authorities of the Hong Kong

Special Administrative Region have launched serious

efforts in all areas of enforcement and have been

exemplary partners with the United States in the battle

against narcotics.

India

India, an important producer both of licit and

illicit narcotics, is also a crossroads for

international narcotics trafficking. There was no USG

illicit

[[Page 11331]]

poppy survey in India in 1998. Indian authorities

claimed there were less than 100 hectares of illicit

cultivation, but the last available USG surveys in 1996

and 1997 identified 3,100 and 2,000 hectares of illicit

opium poppy, respectively.

India's location between the two main sources of

illicit opium, Burma and Afghanistan, as well as its

relatively well-developed transportation

infrastructure, make it an ideal heroin transit point.

There was credible evidence of large amounts of Burmese

heroin being trafficked through India's northeastern

border with Burma. However, there is no evidence at

this time to indicate that opiates transshipped through

India reach the United States in significant amounts.

The Government of India (GOI) continues its

progress in controlling the production and export of

narcotics chemical precursors produced by India's large

chemical industry. The GOI controls restrict access to

acetic anhydride (AA), a chemical used to process opium

into heroin. Nevertheless, there were unauthorized

exports of essential chemical precursors and

methaqualone (mandrax), a popular drug in Africa.

Despite GOI precautions, in late 1998, there was

growing evidence of AA entering Burma via India's

porous Northeastern border for use in Burmese heroin

refining. The GOI has a cooperative relationship with

the DEA. However, there has been limited success in

prosecuting major narcotics offenders because of the

lack of enforcement funding and weaknesses in the

intelligence and judicial infrastructure.

In 1998, India took concrete steps to deter

trafficking and control chemicals. The GOI

systematically combatted illicit opium cultivation by

combining remote sensing information with raids and the

destruction of illicit crops. The Narcotics Control

Board (NCB) continues to monitor industry manufacture

and sales of controlled and precursor chemicals

carefully, resulting in a price rise of precursor

chemicals for illicit use. The NCB fully staffed three

new zonal offices opened in 1996 along the border with

Pakistan, and they are now fully operational. The zonal

office in Imphal, Manipur, is also being fully staffed

to add a greater enforcement presence in the northeast.

GOI counter-narcotics officials increased their

cooperation with drug liaison officers from countries

in Europe, the Middle East and Africa to undertake a

successful series of controlled delivery operations in

1998. These operations, many through parcel post,

resulted in the arrest of more than 18 persons and the

seizure of quantities of heroin, hashish, and

methaqualone. The GOI has created the position of Joint

Secretary for Narcotics in the Ministry of Finance

reporting directly to the Revenue Secretary in order to

tighten licit and illicit narcotics controls. This

position has also increased the flow of information to

Mini-Dublin Group countries and other bilateral and

multilateral donors. Finally, to decrease the backlog

of cases, the GOI continues to work with special state

courts for narcotics matters, and federal narcotics

enforcement officials continue to meet quarterly with

their state government counterparts to share

information and provide training. Federal efforts have

spurred the formation of specialized narcotics units in

state and metropolitan police agencies.

India is a party to the 1988 UN Drug Convention,

but has not yet enacted supporting legislation on money

laundering or asset seizure under civil law. This

supporting legislation is now being prepared for

resubmission to the Parliament. However, with the

cooperation of UNDCP, the GOI hosted a regional

conference on money laundering in New Delhi in March

1998. The conference focused on harmonizing regional

efforts to fight money laundering and brought together

experts from all over South Asia.

In order to build on this progress, the USG will

encourage GOI to take several important law enforcement

steps in 1999. India needs to increase seizures of

drugs sharply and to investigate and dismantle

smuggling rings. The GOI should give increased priority

to combating trafficking on the Indo/Burma border,

which may be at least five metric tons of heroin per

[[Page 11332]]

year. The GOI should pass the amendments to the

Narcotic Drugs and Psychotropic Substances Act (NDPS)

of 1985, introduced into Parliament in August 1997,

which would modernize the criminal justice system.

India is the world's largest producer of licit

opiates for pharmaceutical use and the only producer of

licit gum opium. The GOI continues to tighten its

control over diversion of licit opium. However, some

opium continues to be diverted from the country's legal

production. The GOI estimates diversion at about 10

percent, although it may be as high as 30 percent. As a

licit producer of opium, India must meet an additional

certification requirement. In accordance with Section

490(c) of the Foreign Assistance Act, India may not be

certified unless it maintains licit production and

stockpiles at levels no higher than those consistent

with licit market demand and has taken adequate steps

to prevent significant diversion of its licit

cultivation and production into illicit markets and to

prevent illicit cultivation and production.

Production and stockpile of licit opium in India

has clearly not exceeded licit market demand. Indeed,

India's stockpile has been barely adequate for some

time and disastrous weather during the 1997-1998 poppy

growing season, combined with a cultivator's ``strike''

which delayed planting, led to a 1998 harvest that is

one of the smallest on record: about 260 metric tons

(MT), well under even initial GOI estimates. To meet

domestic and international licit demand, the GOI now

concedes that it has been forced to ``completely

exhaust'' its licit opium stockpile, leaving no

carryover stock from 1998 whatsoever. This precarious

situation makes an adequate 1999 harvest extremely

important, and the USG is thus encouraging increased

licit production.

To meet India's share of anticipated world demand

for licit opium in 1999, and begin rebuilding domestic

stockpiles to about 750 MT, the GOI plans to produce a

licit opium harvest of at least 1300 MT in 1999, just

below the 1997 record harvest. To meet this goal, the

GOI has decided to reverse years of reductions in

acreage (to improve control of diversion) and to

sharply increase both the area under cultivation and

the number of licit opium cultivators. Acreage will be

increased by 32 percent; licit cultivators will more

than double.

In 1998, India took six important steps to increase

licit opium production to meet market demand and

rebuild the stockpile while curtailing the diversion of

licit opium. These steps included: (1) sharply raising

the number of hectares to be cultivated for the 1998-

1999 poppy growing season; (2) retaining the highest-

ever minimum qualifying yield at 52 kilograms/hectare

to discourage diversion from the licit crop; (3)

raising the prices paid to opium cultivators to

increase incentives for declaring and selling to GOI

all licit opium; (4) expanding licit opium diversion

controls to include re-surveys of plots after the

planted crop reaches a particular stage of growth to

ensure that the area under cultivation matches the

amount of land licensed; (5) destroying cultivation

more than five percent above the licensed amount with

the cultivator liable for prosecution; and (6) raising

licit opium diversion-related offenses by licensed

cultivators to the level of trafficking offenses, with

convictions resulting in 10 to 20 years imprisonment

and fines up to U.S. $6,000.

While these are important steps to curb diversion,

the USG believes even more must be done, given the

significant planned increase in hectarage and farmers.

The USG will work with the GOI to increase diversion

controls. Despite the assent of a high-ranking GOI

official in February 1998 to undertake a comprehensive

joint opium yield survey with the USG, the GOI has not

yet signed the necessary formal agreement. A joint

licit opium survey would provide a firmer scientific

basis for the GOI to set minimum qualifying yields

(MQY) for licit opium farmers. More realistic MQYs

would facilitate governmental controls on diversion and

forecasting the supply of licit opiates.

[[Page 11333]]

Jamaica

Jamaica is a major transit point for South American

cocaine en route to the United States and is also the

largest Caribbean producer and exporter of marijuana.

During 1998, the Government of Jamaica (GOJ) made some

progress toward meeting the goals and objectives of the

1988 UN Drug Convention, to which it became a party in

1995. At regional meetings, GOJ officials actively

supported counter-drug initiatives. Bilateral counter-

drug cooperation is good and improving, especially in

the area of maritime law enforcement. The U.S.-Jamaica

bilateral maritime agreement, proposed by the USG in

July 1995, came into force when Jamaica passed enabling

legislation in February 1998. Jamaican forces

participated in several combined operations under the

new agreement.

During 1998, the GOJ removed four persons to the

United States, three by extradition and one under a

waiver of extradition, compared to three removals in

1997. The USG and GOJ worked together to remove from

the list of pending extradition requests all non-active

cases, leaving 17 pending requests for which the United

States seeks early resolution.

GOJ's cannabis eradication during 1998 was down

only slightly from 1997, despite a lack of helicopter

and fixed wing air support. Marijuana and cocaine

seizures and drug-related arrests increased

significantly over 1997; hash oil seizures were down.

The GOJ made a valuable contribution to regional anti-

drug efforts by assuming funding of operating costs of

the Caribbean Regional Drug Law Enforcement Training

Center, located near Kingston and built with USG

funding under a UNDCP project.

In 1998, the Lower House of Parliament passed

amendments to the existing anti-money laundering

legislation; Senate action is pending. If passed by the

Senate, the proposed amendments would raise the

threshold for mandatory transaction reporting from U.S.

$10,000 to U.S. $50,000 equivalent, but would also

introduce a new requirement that suspicious

transactions in any amount be reported. Further GOJ

action is required to bring its anti-money laundering

law in line with international standards, especially

extending the law to cover the laundering of the

proceeds of all serious crime.

Current Jamaican law requires the conviction of a

criminal drug defendant prior to commencing a

forfeiture action. The GOJ forfeited the house of a

convicted drug trafficker in 1998. However, Jamaica's

current asset forfeiture regime does not permit the GOJ

to take full advantage of the forfeiture mechanism to

augment the resources of its anti-drug agencies and

deprive criminals of the proceeds of their crime.

In 1998, the GOJ did not table in Parliament a

precursor and essential chemical control law, despite

stated commitments to do so for the last several years.

However, the GOJ has budgeted for implementation of

chemical controls, and the USG has already provided

training to Jamaican precursor chemical control

personnel. The GOJ did table in Parliament anti-

corruption legislation, which is currently under

debate. Corruption, especially among members of the

security and law enforcement forces remains a serious

problem in Jamaica, and the GOJ should take stronger

action to prosecute corrupt individuals.

In 1998, the GOJ arrested 7,352 drug offenders, and

the Supreme Court reported 10,290 convictions of drug

offenders. However, even though GOJ counter-drug

cooperation with DEA continued to be good, no Jamaican

drug kingpins were arrested or convicted during 1998.

The GOJ has agreed to develop in the coming year, with

USG assistance, special units to target drug kingpins

and apprehend fugitives from justice.

The GOJ has in place a comprehensive national drug

control strategy which covers both supply and demand

reduction; the GOJ should add to its strategy specific

goals and objectives and measures of effectiveness. The

GOJ also should ratify the Inter-American Convention

against Corruption,

[[Page 11334]]

and, as it mandates, put in place legislation that

requires financial disclosure by public officials. The

GOJ also needs to take stronger steps to strengthen

internal controls and investigate and prosecute corrupt

members of the security and law enforcement forces.

The USG will continue to provide technical

assistance, training, and equipment to the GOJ to help

strengthen its anti-drug, anti-money laundering and

anti-corruption laws and enforcement capabilities. In

addition, the USG will continue to assist the GOJ to

address port security problems identified in a 1997

comprehensive assessment.

Laos

Laos remains the world's third largest producer of

illicit opium, trailing only Burma and Afghanistan.

However, because small-scale subsistence farmers,

without fertilizer, irrigation, or other agricultural

improvements grow opium, Lao yields average less than

half those found in neighboring Burma.

For the 1998 growing season, although opium

cultivation fell only seven percent, adverse weather

conditions, which also affected opium production in

Burma and Thailand, dramatically affected production

levels. The United States estimates Lao potential opium

production for 1998 at 140 metric tons, down 33 percent

from the previous year. Significant decreases in

production can also be attributed to lower productivity

per hectare due to crop substitution in project areas

funded by foreign donors. These areas continued to show

only low levels of opium cultivation, none of which was

for commercial distribution, but rather was restricted

to small amounts for local use.

In January 1998, a heroin laboratory was seized in

Bokeo province, the first such seizure this decade. In

July, the position of Chairman of the Lao National Drug

Commission was raised to ministerial rank. A DEA agent

was assigned to the U.S. Embassy in Vientiane for the

first time since 1975. Laos is not yet a party to the

1988 UN Drug Convention, but the government of Laos

(GOL) has set a goal of ratification by the year 2000.

Laos' location next to the world's largest producer

of opium and heroin (Burma), and its land borders with

countries that combine important opium markets and

ports on trade routes to Europe and the United States

(China, Thailand, Vietnam, and Cambodia), make it an

important route for drug trafficking. The GOL does what

it can to combat trafficking and has shown itself ready

to work very closely with the international donor

community to attack the socio-economic problems

underlying poppy cultivation in Laos. The GOL has

already opened four Drug Control Units, and is

determined to open one in each of the country's

provinces.

Mexico

Mexico made significant counter-narcotics progress

in 1998. Building on presidential commitments made in

May 1997, the United States and Mexico developed a Bi-

National Drug Strategy--released in February 1998--

which identified sixteen areas for cooperation in

reducing the illicit consumption, production and

trafficking in drugs. Later in 1998, the two countries

developed Performance Measures of Effectiveness for the

Strategy to guide its implementation and to provide a

means of monitoring progress. The Measures were

formally adopted during President Clinton's trip to

Mexico in February 1999. The U.S.-Mexico High-Level

Contact Group on Narcotics Control (HLCG) and the

Senior Law Enforcement Plenary continued to serve as

the principal fora for coordination of bilateral

counter-narcotics cooperation.

USG agencies enjoy productive working relationships

with Government of Mexico (GOM) counterparts across a

broad range of counter-narcotics programs. The two

governments have established numerous mechanisms, both

formal and informal, to promote good communication and

coordination.

[[Page 11335]]

The most serious obstacles to both bilateral

counter-narcotics cooperation and the effectiveness of

Mexican agencies in combating the major drug cartels

relate to institutional weaknesses, such as lack of

adequate resources and training and widespread drug-

related corruption. The GOM took a number of important

steps in 1998 to address these problems. For example,

for the first time ever, the Office of the Attorney

General (PGR) implemented an intensive screening

process for recruits to law enforcement as well as for

all personnel assigned to sensitive positions. This

level of screening will eventually be expanded to all

PGR personnel. These kinds of reforms, along with

bilateral training activities, are helping to build

confidence between USG and GOM authorities, resulting

in improved bilateral cooperation.

The GOM also took steps during 1998 to implement

important legislative reforms designed to enhance

efforts against drug trafficking and organized crime.

Among these steps were introduction of legislation

regulating seized property to allow for asset

forfeiture and sharing, streamlining the Mexican code

of criminal procedure to facilitate prosecution of drug

traffickers, and reducing the ability of employees

dismissed for corruption to be reinstated upon appeal.

In an effort to enhance professionalism and increase

capabilities, Mexican law enforcement and judicial

officials participated actively during 1998 in various

bilateral training programs designed to improve

management of evidence, electronic surveillance, asset

forfeiture, drug detection, and fraud investigation.

During 1998, Mexican authorities arrested numerous

drug traffickers, including Jesus and Luis Amezcua

(major methamphetamine traffickers wanted for

extradition to the United States), twenty members of

the Amado Carrillo Fuentes Organization (the Juarez

Cartel), the former military commander of Baja

California, and two Federal Judicial Police chiefs.

Notable convictions and sentences for drug-related

crimes in 1998 include former Drug Czar Army General

Gutierrez Rebollo (sentenced to almost 14 years for

offenses involving illegal possession and

transportation of firearms and abuse of authority), and

Ernesto ``Don Neto'' Fonseca Carrillo (sentenced on

drug charges to 11 years, in addition to time he is

serving for the 1985 murder of a DEA agent). Over

10,000 Mexican nationals and 255 foreign nationals were

arrested on drug-related charges.

On the basis of legislation and regulations adopted

in 1996-97, the GOM made progress last year in

detecting and prosecuting instances of money

laundering. The Financial Investigative Unit

established in 1997 in Mexico's Finance Ministry

continued to work closely with USG counterparts on

money laundering investigations, providing leads,

follow-up and access to witnesses. With informational

assistance and technical support from the USG, the GOM

increased seizures of drug traffickers' assets in 1998,

including a $250 million seizure of assets connected to

Alcides Ramon-Magana in Cancun. Mexico's first

successful prosecution for money laundering

demonstrated encouraging progress in 1998.

The GOM sustained its massive interdiction and

eradication programs throughout 1998. For example,

Mexican law enforcement and military personnel seized

22.6 metric tons of cocaine and over 1,000 metric tons

of marijuana. They eradicated for an entire growing

season approximately 9,500 hectares of opium poppy and

9,500 hectares of cannabis. The GOM continued

cooperation with the USG in interdicting drug shipments

throughout 1998. For example, during one major event,

the GOM seized three tons of cocaine from a trafficking

vessel forced to land by coordinated action by the U.S.

Coast Guard and the Mexican Navy. In addition,

bilateral cooperation in using U.S. air assets to

detect and monitor drug flights increased in 1998.

Both governments recognize that much remains to be

done to dismantle the major international drug cartels,

which pose such a serious threat to both nations. The

criminal organizations based in Mexico are well

financed and violent, placing Mexican law enforcement

and military personnel at grave risk. The persistent

corrupting influence of these groups is also an

important concern for the GOM.

[[Page 11336]]

President Zedillo has publicly underscored his

commitment to combat drug trafficking and to strengthen

Mexico's law enforcement institutions. He reaffirmed

this commitment to U.S. officials, including in a June

1998 meeting with President Clinton at the UN General

Assembly Special Session on Drugs. In February 1999,

the GOM announced a major public security initiative

which will significantly intensify the national anti-

drug effort. Despite an austere budgetary situation,

President Zedillo has directed the GOM to invest up to

$500 million over the next three years on enhancements

to the nation's capabilities to interdict drug

shipments, to combat the major drug trafficking

organizations, and to counter the corrupting influences

that these organizations exert in both the public and

private sectors. the initiative also calls for a major

effort to address street crime and violence.

The USG and the GOM have carefully nurtured

positive working relationships, and the goodwill

resulting from those efforts will remain essential as

both Governments continue to confront the shared threat

of international drug trafficking.

Nigeria

Nigeria has failed to fully meet the criteria for

cooperation with the United States on counter-narcotics

matters and has not taken adequate steps on its own to

meet the goals of the 1988 UN Drug Convention. The

vital national interests of the United States, however,

require that Nigeria be certified in order that

assistance, otherwise withheld, might be provided to

support the transition to democratic civilian rule and

the increased efforts to improve cooperation on

counter-narcotics and other crime evident during recent

months.

Nigeria remains the hub of African narcotics

trafficking. Nigerian criminal organizations operate

global narcotics trafficking networks. They control

sub-Saharan African drug markets, transport heroin from

Asia to Africa, Europe and the United States, and

transport cocaine from South America to Europe, Africa

and Asia. Nigerian smugglers are responsible for a

significant portion of the heroin used in the United

States. Marijuana, the only narcotic grown in Nigeria,

is exported to Europe and other African nations, but

has little impact on the United States.

Nigerian counter-narcotics efforts remain unfocused

and lacking in material support. New head of state

General Abubakar's strong public stand against

narcotics trafficking and other crimes was a welcome

change from past indifference, but has not yet resulted

in new policies or action. The Government of Nigeria

(GON) reaffirmed the existing bilateral basis for

extraditions, but had not yet concluded any

extraditions by the end of 1998. The 1995 National Drug

Strategy remains unimplemented; wage increases that

would have given law enforcement personnel a living

wage for the first time in more than a decade were

announced, but have not yet been implemented. Nigerian

law enforcement continues to suffer from lack of

material support, insufficient training, and widespread

corruption.

In 1998, there was some progress with the

interdiction of low level couriers, gradual

improvements in the capabilities of the National Drug

Law Enforcement Agency (NDLEA), and the intensification

of basic demand reduction efforts. The NDLEA made a

number of seizures from individual couriers, but no

major drug traffickers were prosecuted or convicted;

total heroin seizures decreased. The increasingly

sophisticated bulk and mail concealment methods of drug

traffickers are moving beyond the capabilities of

Nigerian law enforcement to detect them. The GON did

not share counter-narcotics intelligence with the USG.

A limited number of asset seizures were made, none

against major traffickers or money launderers, and no

asset seizures were prosecuted to conclusion. Nigeria

has only just begun to acknowledge the depth of its own

drug abuse problem. Demand reduction efforts have

intensified with the opening of anti-drug clubs at

Nigerian universities, and their endowment with anti-

drug literature and videos. Most of these

[[Page 11337]]

efforts, however, are nascent and are hindered by the

continuing misperception that drug abuse is a

``foreign'' problem.

Nigerian money launderers operate sophisticated

global networks to repatriate illicit proceeds from

narcotics trafficking, financial fraud and other

crimes. Efforts to enforce the well-drafted money

laundering decree were uneven and superficial, and did

not result in any convictions or asset seizures that

were prosecuted to conclusion.

Nigeria is one of the most important countries in

Africa. What happens in Nigeria politically and

economically will, to a large degree, determine whether

there is stability and progress toward democracy and

economic reform in West Africa. If Nigeria's ongoing

transition fails, it could easily result in an

implosion of government and the collapse of the

economy, triggering a humanitarian disaster in Africa's

most populous country, with over 100 million people,

and a destabilizing exodus of Nigerians to neighboring

states. Such an upheaval could also disrupt the

movement of high-quality Nigerian oil, which accounts

for more than seven percent of total U.S. petroleum

imports.

If, on the other hand, Nigeria's transition

succeeds, it will be an example to all of Africa, and

has the potential to lead to economic growth and

greater transparency in government. Nigeria could

become an engine for growth in West Africa. A stable

and democratic Nigeria will permit greater cooperation

between law enforcement agencies, and the opportunity

to reduce the impact of Nigerian criminals who prey on

the American people.

The military's acceptance of its appropriate role

in a functioning democracy, and the new civilian

government's ability to govern, will be critically

impaired if Nigeria if deprived of the full range of

U.S. support. Building a political consensus and

meeting the challenges of a collapsing economy will

also depend in no small part on outside assistance and

expertise.

Denial of certification would block assistance the

new democratically-elected government will need to meet

these challenges, seriously damaging the prospects for

success of stable, transparent democracy in Nigeria.

U.S. vital national interests require providing

humanitarian, economic and security assistance to

Nigeria as well as counter-narcotics assistance from

all sources. The risk of not doing so now would

jeopardize not only Nigeria's transition to democracy,

but also Nigeria's attempts to reinvigorate its failing

economy and support for democracy and peacekeeping

throughout the region. Further, any new civilian

government's ability to work with the United States on

all issues, including counter-narcotics and other law

enforcement, will depend on its access to multilateral

lending and U.S. technical and economic assistance. The

risks posed by the cutoff of assistance clearly

outweigh the risks associated with GON's inadequate

counter-narcotics performance over the past year.

Pakistan

In 1998, Pakistan advanced toward its goal to

eliminate opium poppy in the year 2000, by reducing

opium poppy cultivation by 26 percent. The atmosphere

for cooperation on drug control between Pakistan and

the United States also improved significantly. Pakistan

extradited two narcotics fugitives to the United

States, whereas none were extradited in 1997.

The Government of Pakistan (GOP) undertook an

unprecedented poppy eradication campaign in some of its

most inaccessible territory, which reduced cultivation

by 26 percent and production by 24 percent and

decreased the cultivation level to significantly below

that of 1996. Despite financial constraints, the GOP

ensured that wheat for planting alternative crops

arrived in poppy-growing areas in time for the October

planting, to forestall a return to poppy cultivation.

Narcotics seizures were down, with heroin seizures

down 48 percent. The GOP did, however, prevent the re-

emergence of heroin/morphine labora

[[Page 11338]]

tories in Pakistan, although some labs moved across the

border into still chaotic Afghanistan. In November, the

Prime Minister pledged to take steps to strengthen

Pakistan's law enforcement agencies, particularly the

Anti-Narcotics Force (ANF).

To meet law enforcement goals, a number of

important arrests were made in 1998, including three

individuals arrested in conjunction with heroin

shipments that exceeded 100 kilograms. The GOP also

arrested Faheem Babar, a major Lahore trafficker, whose

arrest led to the discovery of an important drug

trafficking organization operating with the alleged

collaboration of at least one mid-level government

official. Assets of drug traffickers totaling $5.8

million were frozen in 1998, and for the first time, a

High Court ruled in favor of forfeiture of the assets

to the government.

The GOP took several important steps to strengthen

law enforcement in 1998. The Control of Narcotics

Substances Act and the Anti-Narcotics Forces Act were

extended to the tribal areas of the Northwest Frontier

Province, a major drug trafficking area. For the first

time, Pakistan's anti-narcotics laws can be legally

enforced in Pakistan's tribal areas. The GOP also

approved cooperation with DEA for the establishment of

a special vetted unit within the ANF.

To meet extradition goals, the GOP extradited two

drug traffickers on the extradition list and arrested

three more. Many extradition requests remain

problematic, as neither DEA nor the GOP have addresses

for many extraditables within Pakistan. The GOP also

requested certification that the cases were still

pending in U.S. courts. To meet anti-corruption goals,

in 1998, ANF removed 70 corrupt officials from its

ranks.

Pakistan's counter-narcotics performance improved

in many aspects from last year's record. Independent of

USG assistance, the GOP took a number of steps on its

own to meet the goals and objectives of the 1988 UN

Drug Convention, including: extending the Control of

Narcotics Substances Act and the Anti-Narcotics Act to

tribal areas in the Northwest Frontier Province;

freezing significant drug trafficking assets; arresting

several major drug traffickers; and dismissing corrupt

counter-narcotics officials.

The GOP also actively and fully cooperated with the

USG beginning in April to meet a number of important

mutual counter-narcotics goals, including: an agreement

with DEA to establish the special vetted unit;

increased extraditions; arrests of some major drug

traffickers; and the location of illicit poppy fields

for the spring poppy eradication program.

The GOP should take immediate steps to improve its

performance in a number of areas, including:

significantly improved narcotics seizures; convictions

of major drug traffickers; closure of pending cases

against two prominent drug offenders, Sakhi Dost Jan

Notezai and Munawar Hussain Manj; concentration of law

enforcement resources in investigations, arrests,

prosecutions and convictions of drug kingpins; and

steps to enact and implement the narcotics-related

money laundering provisions of the Control of Narcotics

Substances Act and to approve formally the Drug Abuse

Control Master Plan.

Panama

Panama is a major transit point for Colombian

cocaine and heroin en route to the United States.

Cocaine passes through Panamanaian territorial waters

concealed in fishing boats, ``go-fast'' boats and ocean

freighters. Some of it is offloaded on the Panamanian

coast and then transported by truck up the Pan American

highway bound for the United States, or carried by

couriers travelling by air to the United States and

Europe.

There is no evidence that any senior officials of

the Government of Panama (GOP) are involved in drug

smuggling. Nor does government policy encourage or

facilitate drug-related criminal activity. However, the

amount of drugs seized by Panama's neighbors to the

north on the Pan American highway

[[Page 11339]]

suggests either inadequate inspections or corruption on

the part of GOP border officials. The judiciary, with

its traditional susceptibility to political influence

and threats, remains a concern because of plans for it

to assume control of the Judicial Technical Police, the

principal partner of USG counter-narcotics operations.

The GOP continued implementation of its national

counter-narcotics plan and its excellent cooperation

with USG counterparts in 1998. Collection of

information by the Financial Investigations and the

Financial Analysis Units also improved during 1998.

However, very little progress was made on bringing

cases to prosecution. Panama remained active in

international fora and associations targeting money

laundering including the Egmont Group, the Caribbean

Financial Action Task Force (CFATF), the Basel

Committee's Offshore Group of Bank Supervisors, and the

Commission Against Addiction and Illicit Drug

Trafficking (CICAD) of the Organization of American

States.

In 1998, GOP officials seized 11.771 metric tons of

cocaine and 22 kilos of heroin. Although the lack of

resources for counter-narcotics police remains a

problem, with USG assistance, the facilities and

equipment of the Panamanian National Maritime Service

have been upgraded, facilitating the highest level of

cooperation on maritime interdiction in the region.

Maritime operations included several shiprider

operations and numerous occasions of information

sharing and cooperation on maritime drug interdiction.

Highest priority in the coming year will be signing

a maritime counter-narcotics agreement, achieving

greater success in prosecuting money launderers,

expanding money laundering legislation to include the

profits of all crimes, and increasing interdiction

capabilities of the Panamanian counter-narcotics

police.

Paraguay

Up to 40 metric tons of primarily Bolivian cocaine

are estimated to transit Paraguay annually, en route

through Argentina and Brazil to the United States,

Europe and Africa. Paraguay is also a source country

for high-quality marijuana. Significant money

laundering occurs, but it is unclear what portion is

drug-related.

In 1998, Paraguay signed a new bilateral

extradition treaty with the United States that includes

extradition of nationals. Modest improvements in

counter-narcotics performance were achieved after the

inauguration of the Cubas administration in August,

such as the seizure of 215 kilograms of cocaine (more

than the previous two years combined) and arrests of

numerous low-level narcotics traffickers.

However, the Government of Paraguay (GOP) failed to

accomplish the majority of the agreed-upon counter-

narcotics goals for 1998 in a manner sufficient for

full certification. Paraguay did not implement its

national drug control strategy through effective

investigations leading to the arrest and prosecution of

major drug traffickers, corrupt officials and their

associates; drafted, but did not pass a revised anti-

drug statute which includes provisions authorizing

controlled deliveries and undercover operations, and

criminalizes drug-related conspiracy; failed to

effectively implement the new money-laundering statute;

and failed to develop an effective anti-drug and

organized crime investigative and operational

capability for the tri-border area. In part, these

shortcomings stem from the country having been

distracted by the May elections and later by continued

political turmoil over the status of former Army

Commander, and unsuccessful 1996 coup plotter, Lino

Oviedo.

Denial of certification would, however, cut off

assistance programs designed to meet the priority USG

goal of strengthening Paraguay's democratic

institutions and civil-military relations. This would

reduce USG support for Paraguay's democracy at a time

when it is being tested by conflict

[[Page 11340]]

between the executive branch and the legislative and

judicial branches, and calls by some Paraguayans for

extraconstitutional measures. Denial of certification

would also jeopardize ongoing cooperation and

assistance programs with the GOP against other key

areas such as intellectual property piracy and

terrorism. Moreover, vital national interests

certification would help promote the political will and

positive action against narcotics trafficking that we

continue to seek from the new Cubas administration.

The risks posed to the totality of U.S. interests

(i.e., promoting democracy, cooperation against

intellectual piracy and continued counter-terrorism

cooperation) by a cutoff of bilateral assistance

outweigh the risks posed by GOP's failure to cooperate

fully with the USG, or to take fully adequate steps to

combat narcotics on its own.

For 1999, Paraguayan counter-narcotics and anti-

money laundering institutions need to be strengthened

and given independence from political institutions and

intrigue. With strong civilian leadership and

cooperation among the President, congress and the

courts, as well as adequate resources and legal

authorities, the GOP could achieve all of its stated

goals.

Peru

Peru achieved a 26 percent decline in coca

cultivation in 1998, yielding a total reduction of 56

percent since 1995. Eradication of illegal coca

cultivation reached an all-time record of 7,825

hectares, nearly doubling the Government of Peru (GOP)

target goal of 4,000. In terms of hectarage, an

estimated 51,000 hectares of coca cultivation remains,

down from an estimated 115,300 hectares in 1995. In the

past two years, a strong law enforcement program

focused on trafficking organizations and transportation

infrastructure, combined with an efficient coca

eradication program, led to a collapse in coca leaf

prices. The reduction in coca leaf prices prompted

greater numbers of farmers to accept the economic

alternatives to coca offered by the USG-Peru

alternative development project, which continued to

expand in 1998. However, coca leaf prices began to rise

throughout Peru in August. This trend may reflect

multiple factors, including new transportation methods,

new markets for Peruvian drugs, natural market forces,

and possibly increased cocaine hydrochloride (HCl)

production in Peru.

As traffickers have adapted and developed new

smuggling methods on Peru's rivers, land borders and

maritime routes, Peruvian counter-narcotics agencies,

the Peruvian National Police (PNP) and the Peruvian

Coast Guard established several riverine counter-

narcotics bases and increased resources for riverine

operations. Cooperating with U.S., Colombian and

Brazilian law enforcement personnel, PNP exchanged

counter-narcotics intelligence and participated in

joint law enforcement operations in the Amazonian tri-

border area. The PNP, working in close cooperation with

U.S. and other Andean counter-narcotics agencies, also

pursued and arrested major drug trafficking

organizations with both U.S. and international cocaine

trafficking connections.

The successful ``airbridge denial'' program has

significantly shaped trafficking patterns in Peru and

has caused the traffickers to develop alternative

methods of transport to export drugs. While traffickers

continue to fly large quantities of coca products out

of Peru, particularly through Brazil, river and

overland routes are increasingly used as intermediate

steps in the export process. Overland routes,

particularly north into Ecuador and south into Chile

and Bolivia, are complementing maritime conveyance of

drugs through Peru's coastal ports. The GOP is

responding to the change by developing riverine and

other counter-narcotics transit control strategies,

using USG assistance and training.

In 1998, the joint USG-GOP alternative development

program operated in five valleys of Peru to strengthen

local governments, provide access to basic services and

promote licit economic activities, thereby establishing

the social and economic basis for the permanent

elimination of coca. A

[[Page 11341]]

total of 239 communities have signed coca reduction

agreements to reduce coca by approximately 16,300

hectares over a five-year period. Two hundred more

agreements are expected to be signed by the end of

1998. Licit economic activities involving assistance

for more than 25,000 hectares of licit crops are

focused on rehabilitating coffee and cocao plantations

abandoned during the ``coca boom.'' One hundred thirty

kilometers of rural roads and four bridges have been

constructed. Other donors are expected to provide

additional resources for infrastructure development.

Donors participating in the November 1998 Peru

Consultative Group in Brussels described Peru as a

model of effective counter-narcotics policy, balancing

interdiction with alternative development and

demonstrating a willingness to make tough decisions

required to achieve sustained illicit coca reduction.

Of the $277 million for Peru's overall alternative

development and demand reduction programs,

approximately $127 million represents funding by non-

USG donors. This support will enable the GOP to

undertake major programs in six new coca-producing

valleys.

Effective drug interdiction--especially

strengthening ``airbridge denial''--and law enforcement

remain the keys to maintaining coca leaf prices at

unprofitable levels. The USG expects that low coca leaf

prices will convince more farmers to abandon coca in

favor of new crops or economic activities. Meanwhile,

Peru's alternative development programs are designed to

provide long-term, sustainable alternative economic

opportunities which will discourage farmers from

returning to coca cultivation. The GOP will need to

increase security in areas still known for guerrilla

activity and undertake a strong counter-narcotics

effort to keep traffickers from interfering with

alternative development efforts. Internal drug

consumption is likely to increase, and the USG will

continue to support the GOP's efforts to counter this

growing problem.

Taiwan

Given its role as a regional transportation/

shipping hub in Asia, Taiwan is considered a

significant transit point for drugs affecting the

United States. Its geographical location also

facilitates Taiwan nationals' involvement in

international narcotics trafficking. Taiwan authorities

make every effort to restrict this role, however, and

routinely cooperate with U.S. enforcement activities.

Although Taiwan's aggressive domestic counter-

narcotics program continued, with an increase of 19

percent in the number of new cases investigated and the

implementation of new counter-narcotics laws, the

amount of drugs seized and the number of prosecutions

in 1998 decreased substantially from 1997. Taiwan

cannot be a party to the 1988 UN Drug Convention

because it is not a UN member. Nevertheless, over the

last several years, Taiwan passed and implemented laws

unilaterally bringing it into compliance with the

Convention's goals and objectives. Taiwan also

continued to expand counter-narcotics cooperation with

U.S. law enforcement agencies through the American

Institute in Taiwan.

Taiwan is not a significant cultivator or producer

of illegal narcotics, but the illegal consumption of

both heroin and methamphetamine remains a serious

internal social problem. Amphetamines were produced in

Taiwan in the past, but aggressive police efforts in

1998 and shifting market forces within the drug trade

have forced producers to move their facilities to

Mainland China. About 68 percent of the methamphetamine

and 42 percent of the heroin seized on Taiwan during

the first eleven months of 1998 originated in Mainland

China.

Kaohsiung Harbor, the world's third busiest

container port, is a major center for shipping to and

from Southeast Asian ports. Monitoring this traffic for

smuggling is a difficult task. A significant percentage

of the nearly six million TEU (twenty foot equivalent

unit) shipping containers at Kaohsiung port last year

were ``in transit'' and, according to standard inter

[[Page 11342]]

national practice, not subject to routine inspection by

Taiwan Customs. Of the nearly 3 million containers

legally entering and leaving Taiwan, Customs examined

approximately 2 percent--a percentage comparable to

that of other ports.

Thailand

Throughout 1998, despite a serious domestic

methamphetamine abuse problem and deep government

budget cutbacks, Thailand continued its long tradition

of cooperation with the United States and the

international community in narcotics law enforcement

and drug control efforts. Thailand cemented its role as

a leader in regional drug control programs by co-

establishing the International Law Enforcement Academy

(ILEA) with the United States in Bangkok. In 1998,

legal and judicial cooperation also became more

streamlined, additional defendants arrested in 1994's

Operation ``Tiger Trap'' were extradited to the United

States, and new cooperative law enforcement programs

were initiated. Extradition to the United States of

Thai citizens and residents who claim Thai citizenship

continued to expand.

The Royal Thai Government (RTG) has one of the most

effective narcotic crop control programs in the world.

USG analysts estimated that Thailand's opium production

in the 1998 growing season declined 36 percent to 16

metric tons. Cultivation decreased by 18 percent.

Reflecting trends of previous years, opium farmers

continue to cultivate smaller, more isolated fields and

engage in multiple cropping to avoid eradication. A

drought last year adversely affected the production of

all agricultural commodities, including opium. The 1999

eradication campaign was inaugurated in mid-November

1998. Concentrated efforts will be necessary to destroy

the poppy before it can be harvested. Activities

related to heroin production, such as the refining of

raw opium into morphine base, continued in northern

border areas where drug producers often combined heroin

operations with the manufacture of methamphetamine.

Thailand has yet to become a party to the 1988 UN

Drug Convention due to its lack of anti-money

laundering legislation. A draft bill is currently in a

legislative committee where differences over the types

of predicate crimes covered are being debated. The RTG

remains committed to the passage of a law with as broad

application as possible. Seizures and court actions

under the asset seizure law continued. In 1998, with

DEA support, the Thai Police established the first in a

series of specially trained narcotics law enforcement

units to target major trafficking groups. RTG programs

aimed at treatment, epidemiology of substance abuse,

and demand reduction were maintained and continue to be

effective.

Venezuela

Venezuela is a major transit country for over 100

metric tons of cocaine shipped annually from South

America to the United States and Europe. Venezuela is

also a transit country for chemicals used in the

production of drugs in source countries. Venezuela is

not a significant producer of illegal drugs, but small-

scale opium poppy cultivation occurs near the country's

border with Colombia.

In recent years, Venezuela's relatively vulnerable

financial institutions and other sectors of the

government have become targets for money laundering of

illegal drug profits. U.S. Customs Operation

``Casablanca'' identified Venezuela as one of the

routes by which Colombian narco-traffickers launder

drug proceeds through Venezuelan banks. Following

arrests in May of Venezuelan bankers implicated in this

case, the Government of Venezuela (GOV) expressed

concern over the vulnerability of its financial sector

and indicated a willingness to cooperate with the USG

on follow-up investigations.

In 1998, Venezuela sustained its efforts to combat

narcotics trafficking and consumption. The National

Anti-Drug Commission was instrumental

[[Page 11343]]

in coordinating better implementation of existing

legislation and lobbying for new, tougher counter-

narcotics legislation.

Actions by the GOV to intensify counter-narcotics

efforts included: programs to implement a major reform

of the judicial system due to take effect in July 1999;

establishment of a central Financial Intelligence Unit;

adoption of a unified regulatory system for chemical

precursors; and passage of a new Customs law.

Regrettably, efforts to gain passage of a Comprehensive

Anti-Organized Crime bill were unsuccessful when the

senate failed to pass the bill before congress

adjourned for elections.

The Venezuelan military continued cooperation with

the USG in an aggressive campaign against small-scale

opium cultivation that occurs in the Sierra de Perija

area near Venezuela's northern border with Colombia.

Two eradication operations in this area conducted in

1998 reduced opium cultivation to less than 50

hectares.

In October 1998, the GOV moved to reorganize the

customs sector--a major element in controlling

narcotics smuggling through ports and airports. The

reform addresses all aspects of customs procedures and

is expected to result in better control measures.

Corruption in law enforcement and the judicial

system continues to be a major problem. The GOV's

judicial reform program is designed to reduce the

opportunities for corruption in the judicial sector.

Venezuela's new President, Hugo Chavez Frias, has

included fighting corruption and combating drug transit

as priorities for his new administration.

Vietnam

Narcotics flow into Vietnam from drug-producing

areas in Burma, Thailand, Laos, and China along

Vietnam's long mountainous borders. Its location close

to the ``Golden Triangle'' renders Vietnam an important

transit route for heroin and more recently for

amphetamines. Drugs entering the country are used

locally and transshipped to other destinations.

Increased availability of heroin and methamphetamine

has fueled a sharp increase in domestic drug abuse.

Trafficking through Vietnam continued at a high

level in 1998, and may be increasing, but has been

accompanied by a steady increase in arrests. Constant

vigilance is necessary to assure corruption does not

make the problem worse. The country is poor and suffers

from a growing problem of trafficking, especially to

school-aged children. Within the constraints of its

limited resources, the Government of the Socialist

Republic of Vietnam (GOSRV) has endeavored to stem the

flow of narcotic drugs to its own population and to

work cooperatively with the world community, including

the United States, in the counter-narcotics effort.

Opium poppy cultivation appears to have declined in

1998, after an increase in 1997. In 1998, Vietnam began

staffing its Drug Control Committee secretariat and

approved a drug control action plan. Vietnam is highly

supportive of bilateral and international cooperation

to stem the flow of drugs into the country and

sponsored two international conferences in Hanoi during

the year. GOSRV also sent capable delegations to other

international conferences.

The USG and the GOSRV are expanding bilateral

cooperation, including negotiating a counter-narcotics

agreement and exchanging information on drug

trafficking cases. The DEA will open an office in Hanoi

in 1999.

Vietnam is a party to the 1988 UN Drug Convention,

as well as the 1961 UN Single Convention and its 1972

Protocol, and the 1971 UN Convention on Psychotropic

Substances.

[FR Doc. 99-5668

Filed 3-5-99; 8:45 am]

Billing code 4710-10-M